the economics and ethics of hurricane katrina · the economics and ethics of hurricane katrina1...

The Economics and Ethics ofHurricane Katrina1

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By LLEWELLYN H. ROCKWELL, JR.* and WALTER E. BLOCK**

ABSTRACT. How might free enterprise have dealt with HurricaneKatrina and her aftermath. This article probes this question at increas-ing levels of radicalization, starting with the privatization of severalgovernment “services” and ending with the privatization of all ofthem.

Introduction

There is an extant literature offering a highly critical assessment ofhow the various levels of government, and the various governmentagencies, dealt with the flooding and the aftermath of HurricaneKatrina in New Orleans and the Gulf Coast (Anderson 2005; Blockforthcoming; Block and Rockwell 2007; Lora 2006; Murphy 2005; Vuk2006a, 2006b; Westley 2005; see also Thornton, 1999). The presentarticle takes it as a given that government at all levels was foundwanting, severely so. Not only did the apparatus of the state notprevent the disaster from occurring in the first place, nor did it provideany timely positive benefits to the afflicted. Seemingly, it reservedwhatever efficiency it could muster for the task of preventing privateinstitutions from serving this function.

Here, in contrast, we attempt to wrestle with the question of howmight private enterprise, if left to its own devices, have functioned inthis regard.2 The second section discusses a moderate capitalist sce-nario for getting the Big Easy back up onto its feet: privatizing schools,eliminating welfare, public housing and business regulation; next, we

*Llewellyn H. Rockwell, Jr. is President, Ludwig von Mises Institute, 518 West

Magnolia Avenue Auburn, AL 36832-4528, [email protected].

**Dr. Walter E. Block, Ph.D. is Harold E. Wirth Eminent Scholar Endowed Chair

and Professor of Economics, College of Business Administration, Loyola University

New Orleans, 6363 St. Charles Avenue, Box 15, Miller 318, New Orleans, LA 70118,

[email protected].

American Journal of Economics and Sociology, Vol. 69, No. 4 (October, 2010).© 2010 American Journal of Economics and Sociology, Inc.

offer a more radical proposal, New Orleans as a city state, and then wediscuss a very radical proposal indeed: abolishing all taxes and relyingsolely on markets for levee protection, and actually curing badweather conditions. The penultimate section deals with an objectionto our thesis, after which, we conclude.

A Moderate Capitalist Scenario

Now that we have made the case that there is something wrong,something terribly wrong with the way things were managed bothpre- and especially post-Katrina, it behooves us to attempt to offersolutions. We do so in three stages; first, in this section, a moderateproposal; in the next, a more radical one; and in the third, an evenmore extreme vision.

If New Orleans is to have a future, privatization must be relied uponto a far greater extent than ever before thought possible.

Consider the following aspects of free enterprise “planning” for thiscity.

Housing

Real estate prices in the “high and dry” areas of the Big Easy havecatapulted.3 This has led for calls, on the part of those innocent of alleconomic insight, for rent control.4 This, of course, is the very oppo-site of the direction to take that can save the city.5 High rents andhouse prices will encourage more investment in this sector of theeconomy. It is far better to allow markets to allocate housing.

However, there are some changes in housing policy that wouldgreatly benefit Crescent City. For one thing, an end to public housingwould be helpful.6 These are dens of iniquity, hopelessness, andcrime, under the best of circumstances. Ideally, this real estate shouldbe sold and the proceeds given back to the people who were forcedto finance them through compulsory taxation. This may not be politi-cally feasible. Margaret Thatcher dealt with this problem by givingthese housing units to their occupants.7 If the new owners wereallowed to sell them at market prices, this would pretty much guar-antee that these accommodations passed into the hands of those who

The Economics and Ethics of Hurricane Katrina 1295

valued them the most, as determined by dollar votes. In many cities,not only New Orleans, public housing sometimes occupies veryvaluable real estate with short commuting distances to the centralbusiness area. There is simply no rationale for reserving these spacesfor the very poor8 in a city struggling for its very life. Unfortunately,the very opposite seems to be occurring; there are now forces pushingfor the reopening of Housing Authority of New Orleans (HANO)properties.

Crime

In the immediate aftermath of Katrina, the crime rate in New Orleansplummeted, as the criminal elements relocated to places like Houston,Memphis, and Atlanta (which, in turn, suffered from a boost inlawlessness).9 However, these same criminal types, often members ofdrug gangs, have been drifting back in to town, to the dismay of thelaw abiding folk. As well, new gangs have been moving in, to takeadvantage of the lacuna in addictive drug provision.10 The prognos-tication does not look good, if fights for turf take place.

The libertarian answer would be to legalize addictive drugs such asheroin, cocaine, marijuana,11 gambling,12 along with prostitution13 andother goods and services the prohibition of which also promotescrime. This plan, at one fell swoop, would give a needed economicboost to the city, as well as pretty much end major crime. Just as welearned from the end of the prohibition of alcohol, gang warfare andcrime emanated not from these goods and services, themselves, but,rather, from their prohibition.

Welfare

All such programs should be ended, forthwith. At the best of times, thedole promotes idleness and dependency.14 A city in such dire straightssuch as the Big Easy cannot afford such fripperies. In the words ofMargaret Thatcher, it needs “workers, not shirkers.” It is as if therewere a life boat, already perilously loaded, and there were still a fewswimmers in the water. If they take on bailers, well and good; theprognostication for the entire boat improves. But, if they encourage

1296 The American Journal of Economics and Sociology

the entry of those unwilling to help, the prospects for the entire groupare put at greater risk. Make no mistake about it: New Orleans is nowin deep dark trouble. The last thing it needs is welfare dependents.Unfortunately, there is no movement afoot to reduce welfare depen-dency, let alone end it.15

An objection to the foregoing is that eliminating welfare in onejurisdiction, and in one alone, would be “discriminatory.” No doubt itwould be. We concede this criticism. However, desperate circum-stances call for desperate measures, and, with the possible exceptionof Detroit, there is no city in the United States in a greater plight thanNew Orleans. That alone would justify special treatment. Now, it maywell be that such a solution may not be compatible with the laws ofthe land. If so, our response is, “change the laws of the land.” Werefuse to be bound by “mere” U.S. law; our brief is to offer solutionsaddressing the plight of a large American city; if they are incompatiblewith extant legislation, so much the worse for the latter. In any case,there is precedent for this sort of thing: free enterprise zones, whereregulations, taxes, etc., are relaxed, reduced, in order to promoteeconomic well being (Kuotsai 1998; Lawless 1986; Rothbard 1995:ch. 21; Strider 1986).

“Public” Services

So called public services such as sanitation pickup, fire protection,filling in potholes, etc., can under ordinary circumstances be done byprivate enterprise at a fraction of the cost needed by civil “servants”and bureaucrats.16 But these are not everyday conditions. As anyinhabitant of New Orleans17 can attest merely by driving in the localstreets. Garbage is everywhere,18 piled up neatly19 in the streets, readyfor a pickup that never comes. The potholes are everywhere, even onmain streets such as St. Charles Avenue; some of them are more likecraters than potholes. As for the side streets, many of them are nowdirt roads, harkening back to a bygone era, or to third-world practice.

Education

One of the major benefits of Katrina and her aftermath is thatnumerous public schools have suffered so heavily from storm and


flood damage that it is unlikely they will soon be able to be openedagain. This is precisely as it should be. These institutions are breedinggrounds for crime and slothfulness. Even when they are somewhatsuccessful, as in the suburbs of many major cities, they still cost us thealternative of private education, which is even more successful at lesscost. The last thing New Orleans needs is the reopening of these densof iniquity.

Even before the advent of Katrina, public education in the BigEasy was in a shambles. According to one commentator, “NewOrleans public schools were a basket case before Katrina hit.”20 Notruer words were ever said. The chaos included poor financial man-agement and abysmal test scores. Why go back to the bad old days,education-wise, when the silver lining of Katrina is that she sweptaway many public schools, along with the rest of her havoc. Whynot try something new? Namely, privatization, and free enterprise,which have worked well in numerous industries, and are supposedlythe bedrock of the country. Katrina has supplied us with a splendidopportunity.21

A More Radical Proposal: The Free State Solution:New Orleans as Hong Kong22

Freeport

If New Orleans were turned into a free port, a city state all on its own,its chances for a rosy financial future would be much improved.Instead of relying on millions of dollars, perhaps billions, from Wash-ington, to be mis spent by FEMA (a four letter “F” curse word in somesouthern parts of the country that is the United States), the Big Easywould be far better on its own.

“He who pays the piper calls the tune.” This is no less true of publicfinance than of any other field of endeavor. With federal money comesfederal control. Often, all too often, this “aid”23 comes not in the formof dollars given to recipients, but as in-kind goods. But the latter isnecessarily less efficient than the former, save in the rare cases wherethe recipient would have spent the money in exactly that format. Forexample, which would the average person rather have, one violin,


one motorcycle, a year’s supply of beer, two suits of clothes, 1,000Frisbees, 10 steaks, and 100 bowling balls, or, the exact amount ofmoney necessary to purchase these things, to use exactly as he wouldlike? The answer is obvious. And yet, FEMA gives residents of NewOrleans mobile home campers, costing some $70,000 each, that willblow away in the next strong wind,24 when they might have offeredlower-priced sturdier prefabricated cottages costing around $5,000each. Better yet would have been cash on the barrel head.

Political separation is the ultimate in decentralization. If the latter isa plus in terms of economic development, then this applies, in spades,to the former. Why should the people of New Orleans be dependentupon the largesse of those thousands of miles away from them, whenlocal control and self reliance is a far better recipe for success?

The obvious objection to this element of the free market plan is thatit is too extreme. However, this may well be the window of oppor-tunity for separation. If New Orleans were to renounce all promisedaid funds from the United States, there is at least the chance that “theywould let my people go.” When South Carolina attempted to utilize itsconstitutional right to this end, there was no big financial gain to bemade by the federal government in acquiescing. That is no longer thecase.

It cannot be denied that there is a sense in which New Orleanshomeowners are owed federal money, and would be foolish torenounce it for what might be seen as pie in the sky benefits ofseparation from the United States.25 After all, the levees that werebreached by the hurricane were built, owned, and operated by thefederal government. There is, however, another side to this issue. Firstof all, many of the laws under which Crescent City dwellers are to becompensated were illegitimate in that they improperly subsidizedirrational geographical settlement patterns. Encouraging people to livein a flood plain simply makes no sense. Second, and more pertinent,the nature of the governmental beast is that these funds will not andcannot be forthcoming without committing further rights violations.From whence will Washington, D.C. collect the funds it is promisingto rebuild the Big Easy? Why, from other taxpayers. And this in turnamounts to no less than theft.26 In the very nature of things it isimpossible to be compensated by the actual perpetrators who are far


too few to make up for the vast damage they have perpetrated. So, injustice, New Orleanians will not be giving up anything that properlybelongs to them in any case.

However, the federal government may well be more willing to cedecontrol of the Big Easy in lieu of paying out these vast sums of moneyalready promised, particularly in contrast to the case if this situationdid not occur. Not that it is likely in any case; but we are attemptingto map out the ideal road ahead whether or not it is politically feasible.

With New Orleans the southern U.S. equivalent of a Hong Kong ora Singapore, the inhabitants of this city will be in a position to pursuea much more radical free enterprise route than would otherwise havebeen the case.

Objections

There are two more objections to this public policy suggestion of oursthat must be considered. First, in the words of a referee of this journal,“it would provoke more big U.S. port cities to follow suit.” Well, yes,true. Virtually any successful innovation will be met with emulation.Imitation, after all, is the highest form of flattery. But this merelydemonstrates that this policy would be a success, not a failure. Anysuccessful policy implemented in New Orleans would presumably becopied elsewhere.

Second, again from a referee, “Hong Kong will remain ‘free’ onlyuntil China feels it is proper time to take it over, and the same goesfor Taiwan as well.” Maybe yes, maybe no; this is an empiricalquestion that is very difficult to answer before the fact. Of course,China has the raw power to do with Hong Kong and Taiwan what itwishes. But there may well be counteracting forces preventing thePeople’s Republic from doing any such thing; for example, wishing toattain the goodwill garnered for it by the Olympic Games of 2008. Inany case, China has not yet seen fit to overrun either of these relativelyfree areas, evidence not compatible with this objection.27 In any case,this has little to do with our recommendation for New Orleans. It isunlikely in the extreme that if the United States were to allow theCrescent City to become a robust free enterprise zone, that any otherpolitical jurisdiction would negate this.


A Very Radical Proposal Indeed: Anarcho-Capitalism28

The problem with separation is that at the end of the day there wouldstill be a government in charge of New Orleans. True, it would be alocal decentralized one, but it would be a government nevertheless.There would be a political leader remaining in office. Whether hefunctions as mayor, governor, or president, it matters little. There aretwo main problems with politics. One, there is no automatic feedbackmechanism that penalizes failure.29 When an entrepreneur cannotsatisfy customers, and they spurn him, he very quickly goes bankrupt.Not so for government. Imagine if the state were in charge of thehorse and buggy industry; likely, it would still be with us now. Two,it is illicit30 in that it forces people to pay it (taxes), whether they wishto avail themselves of its services or not. No other institution in societyhas any such improper legal monopoly over the initiation of violence.

We move, then, to a consideration of how anarcho-capitalism wouldimpact the Big Easy should ever such a lovely prospect come to pass.In a word, it would resemble nothing so much as a giant Disneyland,31

with private police, courts, streets, and, most important in the presentcontext, levees. We will start with a discussion of the latter, since thecase for the former has already been demonstrated.32

Levees

In early 2006, a bevy of local politicians traveled to Holland to inspecttheir dikes. Amsterdam, after all, has dealt with the challenges of beinglocated below sea level to a degree that can only be the envy ofCrescent City. But this was a mere junket, a boondoggle, an excuse forthe bureaucrats of New Orleans to take an all-expenses-paid tripcourtesy of the long suffering taxpayer. Better they should have sentengineers from Louisiana over there to examine their apparatus forkeeping the sea out of town. Even better would have been to hiresome Dutch engineers to come over here and replicate what they havedone there.

But even this sensible plan would constitute merely a governmentaloutsourcing to private enterprise. And, since when has the state beenable to do even this with competence and without graft? Certainly notin New Orleans, and not elsewhere either. No, something far more


thoroughgoing is required. A radical libertarian privatization isneeded. If people like Donald Trump and Bill Gates were to buy uplarge swaths of this ruined city, along with all the streets, roads,highways in town, they, along with several extant businessmen’sassociations, would likely be able to “internalize the externalities”33 toa sufficient degree to build all the water protection they needed, all ontheir own accounts.

That is, if entrepreneurs of this stamp thought New Orleans to be apotentially going concern, they would use their own funds to ensurethat there would be no future flooding as occurred in the aftermath ofHurricane Katrina.34

It is by no means necessary that the entrepreneurs be able topurchase the entire land mass of what now constitutes New Orleans.It is likely in the extreme that far less than this would be economicallyviable. To hazard a guess, perhaps as little as 25 percent. Further, letus not assume that the necessary purchases will be spread out evenlyover the Big Easy. Far more likely they will be concentrated.35 If so, itmay be within the bounds of engineering capability to crediblythreaten to save only those areas of the city where a sufficiently highpercentage of the land can be purchased.

Moreover, there are several large areas already owned by indi-viduals or corporations. For example, Loyola University and TulaneUniversity. Then, there are Audubon and City Parks, the NASAMichoud Facility, The U.S. Coast Guard Reservation, Alvin CallenderField, John Lafitte National Historical Park, New Orleans InternationalAirport, and the University of New Orleans (after, of course, theseare privatized). With fewer bargainers, the transactions costs36 oughtto be lower.

Perhaps the largest single amount of territory possibly to comeunder the control of one owner is comprised of all of the streets andhighways in the city. Whoever comes into control of them will bydefinition be one of the largest landowners in the city, and thus playa role in reducing transaction costs. It is crucially important as to howownership of this facility is transferred into private hands.37 For this, inone fell swoop, offers the answer to the hold-out problem. The mostreasonable way to do this would be to create corporations of streetowners. For example, the St. Charles Avenue corporation would come


to own St. Charles Avenue. Shares of stock would be given to everyproperty owner abutting this street, in proportion to his frontage. If so,this would pretty much end the hold-out problem, as an entire street,or an entire neighborhood, would be bound by the majority of thestockholders.

Weather

There is a weather control industry,38 and private enterprise may beable to make important progress in these areas.

It is viable. It is operational. It has made great strides already, andis continually improving. It is benefiting from the weeding outprocess, whereby firms that satisfy customers enlarge their scale ofoperation, and those that do not pass by the wayside. This is therecipe for success in every other industry known to man, and there isno reason to posit that it cannot, indeed, is not, functioning in this wayat present in terms of weather control.

One large corporation protected its parking lot, chock full ofautomobiles, from a hailstorm by shooting off a cannon that sends“sonic waves up to 50,000 feet in the air.”39 According to Eric Radema-cher, an environmental engineer: “Hailstones are formed and beginwith a piece of dust in the clouds. There is a lot of activity going on,and what we do is to de-ionize that activity in the clouds and keepthose dust particles from collecting moisture out of the clouds in turnreacting and forming what we know as a hailstone.” Hailstones today,hopefully hurricanes tomorrow.

But all is not well regarding the private enterprise of weathercontrol. Government is sticking its evil nose into the initiative. From1962 until 1983, the National Weather Service was involved in suchinitiatives with its Project Stormfury.40 But it gave up, and now bashprivate companies that are attempting to improve matters.

Even that great bastion of free enterprise, China,41 has gotten intothe act.42 According to a China Daily report: “Drought-stricken centralHenan province has been using a method called cloud seeding, inwhich chemicals are shot at clouds.”43 The only problem here is thatthose responsible for these acts were not actually market participants;rather, they were elements of the government.


A similar threat to a complete role for private enterprise in protec-tion against the elements emanates from Russia.44 In order to protectits 60th anniversary of its victory over Nazi Germany the Russian airforce45 was dispatched to disperse rain clouds.46

Personal disclosure. The present authors have no stock in any cloudseeding or any other such company. We are not meteorologists. Wemake no claim that this technology shall be the one that finally bringswinds on steroids like Katrina to her knees. There are dangers in thistechnology, too.47 All we are saying is that the market—with properprotections for private property owners—can be trusted to satisfyconsumers in this field as in all others.

Is there any doubt that if the government can keep its mitts off thisindustry, in the years to come it will make great strides in protectingus from inclement weather? But that means no taxation, no unneces-sary and stultifying regulation, no nationalization, and no subsidiza-tion of government bureaus in competition with these folks (such asthe case in which public libraries compete with private bookstoresand lending libraries, and even with the local neighborhood BlockBuster).

The technology48 of cloud seeding49 has been utilized since 1946.Private enterprise is not anywhere near perfecting it. But it is ourcontention that if government stays away, objections to the contrarynotwithstanding, that this is the best long-run hope for humanity to riditself of this ancient scourge.

Police

Where would the average person rather meet someone for a briskwalk, a tete a tete, or a conversation at 11 p.m. some Saturday night:in Disney world, where he would be protected by private police, orin a public park, such as Central Park in New York City? Exactly.Precisely. This is a silly question. To ask it is to answer it. If there werea crime in the former place, thanks to cameras all over the place, andother technological breakthroughs, the perpetrator would be veryquickly surrounded by a bunch of mice and ducks, all of thempacking serious heat, and the perpetrator would be whisked awaybefore he could carry out his evil intentions. The reason for this is


simple; occurrences of this sort are very bad for business. Millions ofdollars would be lost by the Disney Company were it foolish enoughto allow this sort of thing to happen with any regularity.

Matters are very different as concerns Central Park. There, no oneapart from the victim loses any money when a robbery takes place.Not the mayor, not the police chief, not anyone. Thus, it is no greatmystery that more murders, rapes, thefts, etc. should take place onpublic rather than private property. The only reasonable solution is toturn such matters over to private enterprise (Tinsley 1998–1999).

The point is not that there is anything intrinsic about the public-private distinction, as far as manpower is concerned, that necessarilyinclines us in favor the latter. The key is bankruptcy. Private firmsthat cannot satisfy customers lose profits and are forced out ofbusiness if they do not change the error of their ways. Look at theFortune 500 for last few decades and see how many once seeminglypowerful, even impregnable corporations later disappeared. In sharpcontrast, when the post office or FEMA or the motor vehicle bureaufail to please consumers no such automatic feedback mechanismdisciplines them.50

Matters would be far worse for a meeting in Audubon Park in NewOrleans. For there, one is dealing not only with public police, but withthe disgraced police department of New Orleans. How disgraced? Forone thing, hundreds of them deserted their posts in the aftermath ofKatrina.51 For another, dozens of them were actually caught lootingprivate property, such as Wal-Mart, and not for food or water or othersuch necessities either. Rather, they were carrying jewelry electronicsand other merchandise totally unrelated to any emergency situation.Even worse, they were busily confiscating weapons from innocentprivate citizens, whom they knew full well would only use them fordefensive purposes.52

Far worse than that, far worse, was how these policemen weretreated long after the fact; instead of being fired, which they full welldeserved, rather than being incarcerated along with the other crimi-nals whose behavior their’s so well matched, they were for the mostpart given mere slaps on the wrist. A few days or weeks of suspen-sion, and other punishments of that ilk.53 No, it is time, it is long pasttime, for the privatization of New Orleans’ “finest.”


We realize full well that the suggestions in this section are veryradical, very radical indeed. But, desperate circumstances call fordesperate measures, and New Orleans is indeed presently in a des-perate plight. Consider the following:

• Katrina and its aftermath was responsible for some 1,600 deaths,and $100 billion in property loss (Chamlee-Wright and Rothschild2007).

• Despite a commitment of $110 billion in federal funds (Chamlee-Wright and Rothschild 2007), the recovery of New Orleans andsurrounding areas has been pitifully slow: the high profile andheavily tourist oriented street cars are still (as of October 2007)not operational on New Orleans’ main drag, St. Charles Avenue.

• Crime rates are horrendous. The murder rate is 10 times thenational average. Hundreds of blank bullets were fired in theCrescent City, and no one reported this to the police, out of fear ofretaliation by criminals; this occurred in 2004, before the adventof Katrina in August 2005 (http://www.msnbc.msn.com/id/8999837); there have been fewer murders in the city in the lastyear, but this is because the population has shrunk; on a per capitabasis, New Orleans is still one of the most dangerous placesin the country (http://www.nytimes.com/2006/03/30/national/nationalspecial/30crime.html).

• Mexican workers; further evidence of the plight of the Big Easyis that native New Orleanians are not in the forefront of rebuild-ing their city. Instead, this role has been taken up to a largeextent by immigrants from Mexico and other Latin Americancountries (Cowen 2006).

• As of August 2007, two full years after the Katrina debacle, NewOrleans has still not reached 70 percent of its prehurricanepopulation. Data on this matter are not fully reliable, but thisestimate is based on the number of people receiving mail onthese dates (http://www.gnocdc.org/).

• Insurance rates, not unreasonably, have reached stratosphericlevels, given fears about future storms, levies, the Army Corpsof Engineers, and FEMA. A typical newspaper headline reads:“Many in New Orleans can’t afford insurance” (http://www.


msnbc.msn.com/id/14456934/). Increases in the neighborhood of50 percent are not unknown (http://findarticles.com/p/articles/mi_qn4200/is_20060422/ai_n16222762). This phenomenon, too,is yet another obstacle that must be overcome by this city if it is tosurvive, let alone prosper.

An Objection

Here is an objection made to an earlier version of our article by areferee of this journal:

I see only one problem with your philosophy of complete libertarianism.That is an ideal that can inspire morality in societies that are inhabited bymorally enlightened individuals, but what can you do in modern Westernsocieties that have large criminal and quasi-criminal elements? I readilyaccept the fact that these are in part the product of distorted governmentinterferences in the past. But I ask you to explain what you would do withthe useless and criminal elements of the population if your solutions wereaccepted.

Our answer ranges over several considerations. First of all, as thisreferee acknowledges, previous government programs have greatlyexacerbated the extent of the problem. Were these not in existence, asthey would not be if our recommendation of laissez faire capitalismwere implemented, these challenges would be far more tractable.These governmental interferences with the market are many andserious.

Perhaps foremost amongst them is our welfare system,54 which hascreated dependency in those sectors of society that were alreadysuffering from a lack of initiative. The workings of this program aretruly insidious; they have been instrumental in wrecking the blackfamily (Tucker 1984). By making young females a financial offer thatcould not be matched by the fathers of their children (Murray 1984),but insisting that no male live in the house, the state has in effect“married” these unfortunate women. But there is a wealth of empiricalevidences attesting to the importance of a father in the household,particularly in terms of civilizing young males. Because welfare has ineffect removed adult males from the home, generations of sons havebeen excluded from such training and leadership.55


But welfare, however onerous, is only the tip of the iceberg.There is also the fact that addictive drugs are illegal. This has led to

black markets in these substances, and the African-American commu-nity has been disproportionately devastated by drug gangs, shoot outs,incarcerations, and generalized mayhem as a result. The vast profits tobe earned in this sector of the economy have promoted this destabi-lization. Legalize drugs, all drugs, and then with one fell swoop muchof the disarray will disappear.56

The minimum wage law has also made it more difficult for unskilledworkers to obtain jobs, and thereby improve their skills. Since blackpeople are overrepresented amongst those with lower productivitylevels, this law has been particularly harmful to that sector of thepopulation. The unemployment rates of young black males has almostcontinuously approached those of the Depression era. Confined bylaw to lives of idleness, criminality and subsequent incarceration hasbeen their fate.57

In addition to creating, supporting, and subsidizing a criminalunderclass, the government also has been derelict on the other side ofthe equation: punishing criminals. Were the libertarian tenets of thefree enterprise system to be implemented, punishment would be farmore Draconian, resulting in far less crime.58

Conclusion

The only hope for society and a civilized order is the freedomphilosophy. The promotion of Austro-libertarianism is the dark horsecandidate to protect future generations from horrors such as Katrina.This can and will be done two ways. One, directly, by allowing aprivate enterprise industry devoted to levee building, cloud seeding,and other such techniques to stop future storms dead in their tracks,and/or ameliorate their effects. Two, indirectly, by making us ever somuch more wealthy, so that we will one day have the wherewithal tosupport such new technology, and better care for those few who stillfall victim.

Are there any indications as to the way ahead for New Orleans thathave emerged in the recent period of time, right before this articlewent to press? There are three that can easily be discerned. First, as of


the time of this writing, 8/23/06, the hurricane season in the Gulf ofMexico has been a rather mild one. This cannot but help the prospectsof the Big Easy. Second, despite the horrendous record of FEMA, thisinstitution is still in operation, with many of the individuals respon-sible for its sorry record still in positions of authority. Third, SpikeLee’s film, When the Levees Broke: A Requiem in Four Acts, has onceagain focused attention on this sorry episode in our nation’s history.

Notes

1. The authors acknowledge a debt of gratitude to a referee of this journalwho made very valuable suggestions to us concerning an earlier version ofthis article. Thanks to his efforts, this material is more tightly focused andmuch improved. The usual caveats of course apply.

2. See Murphy (2005a) in this regard. Other support for our position maybe found here: Carden (2008); Young (2008); Stringham and Snow (2008);D’Amico (2008); Dirmeyer (2008).

3. http://www.metro-new-orleans.com/new-orleans-home-prices.html;accessed on 8/23/06

4. Lamancusa (2006).5. Lora (2005); Boudreaux (2005); Anderson (2006).6. Anderson (2000); Bovard (2000); Jacobs (1961).7. Reed (1988).8. Block (2003).9. http://www.google.ca/search?hl=en&q=New+Orleans+evacuees+

crime&btnG=Google+Search&meta=; accessed on 8/25/0610. This article will puzzle some readers. It is neither of the right nor of the

left, it is not liberal, nor yet conservative, but rather libertarian, which means,very roughly, support for the conservatives on free market economics, and forthe liberals on much else, such as civil rights. As you will see, below, we nowbring these thoughts into the article. For more on this see Rothbard (1973);Hoppe, Hans-Hermann. (1993, 2001); Block (1991).

11. Block (1993, 1996a); Block, Wingfield and Whitehead (2003); Cussenand Block (2000); Friedman (1992); Szasz (1985, 1992); Thornton (1991).

12. Vuk (2005), makes the case that New Orleans was foolish to grant toHarrah’s a monopoly status.

13. Block (1991).14. Anderson (1987); Anderson (1978); Brown (1987); Higgs (1995);

LaBletta and Block (1999); Murray (1984); Olasky (1992); Rothbard (1998);Tucker (1984).

15. One quick end to “poverty” would be to declare it illegal and pun-ishable by a stiff term in jail.


16. Bennett (1980); Bennett and DiLorenzo (1982, 1989: 197); Borcherding(1977); Butler (1985); De Alessi (1982); Hanke (1987a, 1987b, 2003); Monsenand Walters (1983); Poole (1976); Savas (1979, 1982).

17. This applies to the senior author of the present article.18. This is being written in April 2006, almost a year after Katrina of August

2005.19. Well, not so neatly in some cases, given the sheer enormity of the

material awaiting pickup.20. http://privateschool.about.com/b/a/201640.htm; accessed on 8/24/06.21. For specifics on the advantages of private vis a vis public schools, see

Rothbard (1972); Vuk (2006a); Young and Block (1999).22. Economically speaking, Hong Kong was the freest country in the

world, when it was independent. See on this, Gwartney (1996).23. Whatever is not first raked off by Bush’s favorite crony “capitalists.” See

text supra at fn. 9.24. Thousands of them are stranded in the wilds of Arkansas for some

reason inexplicable to everyone apart from FEMA bureaucrats.25. According to our interpretation of the Constitution, states, but not

cities, may legally secede from the United States. We can either invite theremainder of Louisiana to join us in this quest, or renounce the Constitutionon the grounds that sovereignty should redound all the way down to theindividual level, let alone to large agglomerations such as cities.

26. Of 23 candidates for mayor of New Orleans, only Peggy Wilson wassound on this issue. She not only mentioned, but emphasized, the deleteriouseffects of taxation, calling for a tax-free Big Easy.

27. Then, too, there is the “Mouse that Roared” (http://www.imdb.com/title/tt0053084/) scenario, wherein a small powerless jurisdiction neverthelessovercomes a much more ostensibly powerful one. Indeed, it is possible toargue that the “mouse,” Hong Kong, has already overcome the strong giant,China, in that the political economic philosophy of the latter now resemblesthat of the former, and not the other way around.

28. Anarcho-capitalism differs philosophically from libertarianism in thatthe former is an extreme version of the latter. Both champion the nonaggres-sion axiom, but only anarcho-capitalism applies this to government in all itsmanifestations.

29. Hazlitt (1979).30. See Anderson and Hill (1979); Benson (1989, 1990); Cuzan (1979);

Fielding (1978); Friedman (1989); Hoppe (1993, 2001, 2003); Hulsmann(1997); Leeson and Stringham (2005); Long (2004); Molinari (1977); Murphy(2002, 2005b); Rothbard (1973, 1978, 1982); Sechrest (1999); Sneed (1977);Spooner (1870); Stringham (1998–1999); Tannehills (1984); Tinsley (1998–1999); Woolridge (1970).

31. http://news.yahoo.com/s/ap/20060414/ap_on_bi_ge/hurricanes_inc


32. Ibid.33. Cordato (1992).34. In sharp contrast, the present politicos have not yet seen their way

clear even to consolidate the numerous and superfluous levee boards. If andwhen they succeed in this, they will have only converted several planningboards into one centralized political authority, something even the Sovietswere able to attain.

35. The Ninth Ward and Eastern New Orleans are the areas most heavilyimpacted by the flooding. Here there will be a great number of small landholders.

36. Coase (1960).37. For the general case in favor of road privatization see Beito (1993);

Beito and Beito (1998); Block (1996b); Block and Block (1996); Caplan (1996);Carnis (2001, 2003); Cadin and Block (1997); Cobin (1999); De Palma andLindsey (2000); Foldvary (1994); Klein (1990); Klein, Majewski, and Baer(1993); Klein and Fielding (1992); Lemennicier (1996); Roth (1987); Semmens(1987).

38. The present authors wish to thank Yang Chenping ([email protected]) for references used in this section of the article.

39. http://www.wlbt.com/Global/story.asp?S=162884840. http://www.google.ca/search?hl=en&q=Project+Stormfury&meta=41. http://news.xinhuanet.com/english/2003-07/07/content_958274.htm42. http://www.newscientist.com/channel/earth/mg18624952.00043. http://news.bbc.co.uk/2/hi/asia-pacific/3893671.stm44. http://news.xinhuanet.com/english/2005-05/08/content_2927631.htm45. http://www.deccanherald.com/deccanherald/may102005/

foreign172222200559.asp46. As well, the governments of Philippines (http://www.mindanews.com/

2005/04/27nws-cloudseed.html), India (http://timesofindia.indiatimes.com/articleshow/1152563.cms), Thailand (http://www.scidev.net/gateways/index.cfm?fuseaction=readitem&rgwid=3&item=Features&itemid=394&language=1),New South Wales (http://www.abc.net.au/news/newsitems/200506/s1385210.htm; http://www.abc.net.au/news/items/200506/1400509.htm?act), and others(http://news.google.com/news?hl=en&ned=us&ie=UTF-8&q=%22cloud+seeding%22&btnG=Search+News), plus several U.S. states such as Utah(http://water.utah.gov/cloudseeding/), Nevada (http://cloudseeding.dri.edu/),Arizona (http://www.tucsoncitizen.com/news/local/060805a1_water_future;http://www.azstarnet.com/dailystar/dailystar/80689.php), Texas (http://www.license.state.tx.us/weather/weathermod.htm), and Colorado (http://www.azstarnet.com/dailystar/dailystar/80689.php) have gotten into the act. They(http://www.slate.com/id/2118533/), too, are horning in on what shouldideally be entirely a private initiative. Perhaps the worst aspect of this is that theU.S. government (http://thomas.loc.gov/cgi-bin/query/z?c109:s517) is now


contemplating getting back into this business. Weather socialism we can dowithout. (Happily, some such as Oklahoma (http://www.owrb.state.ok.us/hazard/weather/wx_mod.php) seem to have suspended their involvement).There is even a silver lining in the cloud of Moscow’s celebration. Privateindividuals too, such as Paul McCartney, have entered the fray, kicking in“$55,000 for three jets to spray the clouds above the city with dry ice. Some50,000 people gathered in Palace Square for McCartney’s concert, only hissecond performance in Russia. The former Soviet regime had banned Beatlemusic as a corrupting influence” (http://specialevents.com/news/syndicate/McCartney_stops_rain_for_Russia_concert_20040623/).

47. http://www.azstarnet.com/dailystar/dailystar/80689.php48. http://www.dw-world.de/dw/article/0,1564,1582805,00.html49. http://www.thetartan.org/2005/04/25/scitech/htw50. There is also the fact that when the public sector gets so big there is

no longer any independent capital goods industry, economic irrationalitybecomes the order of the day. See fn. 1, supra on this.

51. http://www.tpmcafe.com/story/2005/9/4/171811/1974; http://www.msnbc.msn.com/id/9654444/, accessed 8/24/06.

52. See fn 16, supra.53. http://www.blackfive.net/main/2005/09/the_new_orleans.html; http://

www.amren.com/mtnews/archives/2005/09/video_on_police.php; http://www.samizdata.net/blog/archives/007995.html, accessed 8/25/06.

54. Anderson (1987); Anderson (1978); Brown (1987); Higgs (1995);LaBletta and Block (1999); Murray (1984); Olasky (1992); Rothbard (1998);Tucker (1984).

55. Sixty-three percent of youth suicides are from fatherless homes(Source: U.S. D.H.H.S., Bureau of the Census; 90 percent of all homelessand runaway children are from fatherless homes; 85 percent of all childrenwho exhibit behavioral disorders come from fatherless homes (Source:Center for Disease Control); 80 percent of rapists motivated with displacedanger come from fatherless homes (Source: Criminal Justice & Behavior 14:403–426, 1978); 71 percent of all high school dropouts come from fatherlesshomes (Source: National Principals Association Report on the State of HighSchools); 75 percent of all adolescent patients in chemical abuse centerscome from fatherless homes (Source: Rainbows for all Gods Children); 70percent of juveniles in state-operated institutions come from fatherlesshomes (Source: U.S. Dept. of Justice, Special Report, Sept 1988); 85 percentof all youths sitting in prisons grew up in a fatherless home (Source: FultonCo. Georgia jail populations, Texas Dept. of Corrections 1992). Source:http://www.fathermag.com/news/1780-stats.shtml

56. For research in support of these claims, see Block (1993, 1996); Block,Wingfield and Whitehead (2003); Cussen and Block (2000); Friedman (1992);Szasz (1985, 1992); Thornton (1991).


57. For the deleterious effect of minimum wage legislation on the poor, seeBecker (1995); Block (2000, 2002); Block and Barnett (2002); Burkhauser,Couch, Wittenburg (1996); Deere, Murphy and Welch (1995); Gallaway andAdie (1995); Landsburg (2004); McCormick and Block (2000); Neumark andWascher (1992); Rothbard (1988); Sohr and Block (1997); Sowell (1995);Williams (1982).

58. See on this: Kinsella (1996, 1997); Rothbard (1977); Whitehead andBlock (2003).

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